Brexit and Trump represent the increasing destabilisation of mainstream politics. What’s going on?
The underlying issue: no wage growth
In public discourse, the Leave and Remain side largely battled it out over immigration policy, but the real underlying issue of Brexit is the poor economy.
The leave vote expresses the frustration of low-income earners. Britain’s productivity has dropped relative to other developed countries, leading to stagnant wages and living standards. Income gains have accrued to the top one percent and unemployment is concentrated amongst the less skilled. These demographics appear to match those who voted for leave.
Solving these issues require costly, long-term investments in education, training and research. It is much easier to blame immigrants and EU policy, and politicians have capitalised on this accordingly to curry favour with voters.
In fact, immigrants tend to increase workers’ wages. The UK’s disillusioned blue-collar working class are actually losers of globalisation. Globalisation has meant that their job has been outsourced to other countries that can do it cheaper. Goods might be cheaper to consume as a result, but this can hardly make up for not having a job. Transition to new jobs has also been slow due to lack of training and education. Furthermore, unlike Australia, which has a strong union movement, labour markets in the UK are much more deregulated – a remnant of the Thatcher era.
Branko Milanovic’s work elegantly summarises this phenomenon. When we plot change in real income against global income distribution we get a clear view of which people in which countries are the most disenfranchised:
The vertical axis shows the percentage change in real income over the years 1988-2008. The 50th percentile of global income distribution represents the middle class in developing countries like China and India, they have experienced the greatest growth in real income. At around the 80th percentile is the working class in rich, developed nations like the US and UK. These people have not experienced any real wage growth at all.
Rise of the new Right
No major political party represents these people. The conventional Right (i.e. the Conservatives in the UK and the GOP in the US) represent the socially conservative and economically elite. The major left parties are increasingly differentiating themselves by being socially progressive. Protectionist policies, from either side of the spectrum, are no longer politically feasible given the amount of wealth that globalisation has generated, and the tendency for such policies (such as the Brexit leave campaign, and Trump’s ‘make America great again’ campaign) to align with racist and anti-immigration agendas.
The established Right is now juggling between rich people who want liberal markets and small government and working class people who want to feel middle class again. Trump, who represents a ‘new Right’ speaks to the latter, while his Republican colleagues speak to the former.
Similarly, the Left is also juggling between the blue-collar working class (now abandoning leftist parties for the new Right), and urban-dwelling, socially progressive university graduates with well-paid jobs. Jeremy Corbyn represents the interests of the latter, who have flocked to join the Labour party, but fails to gain traction with those struggling to survive in rural towns and villages – Labour’s traditional voter base, and the very people the party was set up to support. It’s telling that Jeremy Corbyn advocated to remain in the EU, yet a third of Labour voters voted to leave – perhaps enough disaffected voters to strip Labour of its major party status come the next UK election.
There is a lot of focus on the supposed stupidity of Leave voters and their support of new extreme right-wing parties, but the real question we should be asking is why are these people voting this way, and how can we make sure they aren’t left behind by globalisation?
An act of economic self-harm
David Cameron called the Brexit result an act of economic self-harm before promptly abandoning the sinking ship. The irony is that by voting to leave the EU, struggling working-class people have only made their lives harder. The fault lies with politicians who have ignored their needs, failed to explain their policies, and yet still capitalise on their struggles to gain political popularity. An unsympathetic and angry Remain constituency can only lead to further ugliness and division, while the real issues at heart remain unsolved.
Economic liberalisation is not to blame. Globalisation and neoliberal economics has led to greater wealth, a bigger pie, if you will. We shouldn’t be shrinking the pie, we just need to divide it more evenly.